The Federal Government has managed to deliver a budget that refines upon previous years and puts forth a few new initiatives, but that is ultimately designed to get them through the next federal election. Most of the population will be pleased to see the new ATO taskforce that’s been proposed to go after multinational tax dodging, along with some crackdown on the superannuation benefits for the wealthier members of the population. The budget predicts that the deficit will fall from $37.1 billion to $6 billion in the next four years.
In our annual review of the Federal Budget, we’ll cut through the noise to quickly get you up to speed on what it means to you. It’s a huge document, however much of it won’t affect you. Keep in mind that the challenge moving forward will be to have the budget bill passed through the Senate, so it’s highly likely that there will be further refinements and changes over the forthcoming weeks.
Income Tax Rates
For the first time in several years, there are changes to tax brackets, however the tax rates themselves are staying the same. The $80,000 bracket is moving up to $87,000, while the 2% “we blew out the budget” temporary budget repair levy will finish up. Other changes include:
Here are the new proposed tax rates for Australian individual taxpayers:
|Taxable income||Tax on this income|
|0 – $18,200||Nil|
|$18,201 – $37,000||19c for every $1 above $18,200|
|$37,001 – $87,000||$3,572 and 32.5% for every $1 above $37,000|
|$87,001 – $180,000||$19,822 and 37c for every $1 above $87,000|
|$180,000 plus||$54,547 and 45c for every $1 above $180,000|
Changes to Superannuation
It was expected that we would see changes to superannuation, as it’s been a political hot potato for some time. Superannuation is frequently referred to as a ‘tax break for the rich’ and it’s the wealthier members of superannuation funds that are currently under the spotlight.
Changes to Companies
If you don’t own a company, there is a good chance that you work for one. The 2016 Federal Budget has offered a bonus to small business owners with a tax cut to the company income tax rate. Further cuts to the company income tax rate are slated for future years, for both small companies as well as larger businesses.
Changes to Education
$1.2 billion has been allocated as additional funding for both government and non-government schools. Overall, this is a modest increase and looks to have greater controls put on it than previous spending promises.
Changes to Health and Welfare
Quite a few cuts have been made to both health and welfare, but nothing to the extent that we saw in the brutal 2014 Budget.
Changes to Defence and Infrastructure
Infrastructure payments and projects are often a favourite of the government just prior to an election, so the additional spending is quite light. While announced as extra funding, much of this has been previously announced and was already budgeted in for payment.